Crowds fill the streets of Myeong-dong in Jung-gu, Seoul. [Yonhap]
Crowds fill the streets of Myeong-dong in Jung-gu, Seoul. [Yonhap]

The government will tighten sanctions against price gouging at hanok stays and urban guesthouses catering to foreign tourists, allowing authorities to suspend operations from the first violation. The move aims to eliminate a persistent source of distrust in South Korean tourism.

The government said Tuesday it approved an amendment to the enforcement decree of the Tourism Promotion Act at a Cabinet meeting. The revised decree takes effect Tuesday, the same day it is promulgated. The amendment is a legislative follow-up to the "price gouging eradication measures" announced at an expanded National Tourism Strategy Council meeting Wednesday.

Under the previous rules, hanok stay operators who failed to post room rates or charged more than the posted price faced only a corrective order for a first offense. Urban guesthouses for foreign tourists had no obligation to post or adhere to listed prices.

The amended decree introduces a mandatory price-posting and compliance requirement for urban guesthouses catering to foreign tourists. It also stiffens penalties for both hanok stays and such guesthouses: operators caught failing to display room rates or charging above posted prices — conduct the government says undermines consumer trust — will face an immediate five-day suspension on the first offense.

The tougher sanctions were first applied to general and lifestyle accommodation businesses under revised enforcement rules of the Public Health Control Act that took effect July 14. Under those rules, violations of price-posting requirements carry a five-day suspension for a first offense, 10 days for a second, 20 days for a third, and a closure order for a fourth.

The government also plans to introduce a "price assurance system" and new penalties for unilateral, unjustified reservation cancellations. Under the price assurance system, operators would pre-register seasonal room rate caps with local governments and publicly display those registered prices. Operators who fail to register rates in advance or charge above registered amounts would face sanctions.

The reforms extend beyond the accommodation sector. The government plans to amend the enforcement rules of the Taxi Industry Development Act and the Food Sanitation Act to apply similarly tightened penalties to taxi operators and food service businesses.


terry@heraldcorp.com